2023 (2) TMI 982 - HC - GST

GST refund dispute for pre-July 2017 contracts must be resolved through arbitration under Section 142(10)

M/s Vedic Projects Pvt. Ltd. Thru Dir. Gaurav Chaudhary Versus State Of U.P. Thru Prin. Secy. Irri. And Water Resources And Ors

The Allahabad HC dismissed a petition challenging a Government Order dated 08.11.2017 regarding GST refunds on pre-July 2017 contracts. The petitioner ... Refund of Tax / VAT - GST on contracts entered prior to 1.7.2017- Section 142(10) of GST Act - Validity of Government Order dated 08.11.2017 - scope of the terms of contract between the parties - formula with rate of VAT has been introduced, by the said order - HELD THAT:- The position which emerges out in the present case is that if there is any dispute regarding refund of amount as claimed by the petitioner, the petitioner could raise its grievance before the Arbitrator as per Clause 34 of the agreement. As far as the challenge to sub paragraph 2 of paragraph 2 of the Government Order dated 08.11.2017 is concerned, the petitioner has pleaded neither in the writ petition nor in the prayer clause that the said paragraph under challenge is in contravention of which provision of the Act 2017. But during the course of argument, learned counsel for the petitioner has relied upon sub-Section (10) of Section 142 of the Act 2017 with an argument that sub paragraph 2 of paragraph 2 of the Government Order is in contravention of the above mentioned provision, whereas sub-Section (10) of Section 142 does not provide any mode of calculation or formula for determining the liability. Nothing has been pleaded or argued by the counsel for the petitioner to show that formula introduced by the Government Order violates the Section 142(10) of the Act 2017 in any manner. As a matter of fact, it does not deal with calculation or formula for determining the liability is arbitrary and unreasonable. Petition dismissed. Issues:1. Challenge to impugned orders dated 02.04.2019 and 08.11.20172. Liability of recipient for Goods and Services Tax (GST)3. Payment dispute and refund claim of GST4. Validity of Government Order dated 08.11.20175. Arbitration clause applicability for disputed amountsAnalysis:1. The petitioner filed a writ petition challenging the impugned orders dated 02.04.2019 and 08.11.2017. The prayers included seeking quashing of the orders, setting aside specific paragraphs, and mandamus for various directions related to GST payment and adherence to government policies.2. The petitioner, a private company engaged in civil construction work, claimed that the respondents, as recipients of their services, were liable to pay GST under the GST Act of 2017 on a reverse charge basis. The petitioner executed work both before and after the enactment of the Act, raising bills for payment.3. The petitioner demanded payment of GST from the respondents, which was deposited with the Commercial Tax Department. The respondents disputed the amount, claiming a lower refund value based on a government order. The rejection of the refund claim led to the petitioner seeking relief through the writ petition.4. The challenge also extended to the validity of sub-Para 2 of Para 2 of the Government Order dated 08.11.2017, alleging that the calculation formula was in contravention of the Act of 2017. The petitioner argued that the formula introduced was arbitrary and unreasonable.5. The court held that the writ petition lacked merit, emphasizing that the petitioner could address any disputes through arbitration as per the agreement clause. The court noted that the petitioner failed to demonstrate how the formula in the government order violated the relevant provisions of the Act of 2017. The petition was dismissed, with the option for arbitration available for disputed amounts, excluding the admitted sum by the State.